Aviva's plans to revamp its continental businesses were overshadowed today by revelations that chief executive Andrew Moss had an affair with a junior member of staff.

Moss, who became chief executive two and a half years ago, admitted to an affair with Deirdre Moffat, 45, a former member of Aviva's human resources department.

The 51-year-old has left his wife and four children to be with Moffat. The two began an affair several months ago after she was promoted to work in his office on a company project.

While there, Moffat, who now goes by the name of Deirdre Galvin, reported directly to Moss in her day-to-day duties. To complicate matters further, Galvin was married at the time to Andrew Moffat, the head of HR for Aviva Europe. She left the company 10 days ago.

The insurer, Britain's second largest, wanted to focus investors' minds on proposals to integrate the operations of 12 businesses across Europe under the umbrella of a single holding company. It said the plan would simplify reporting lines to new European boss Andrea Moneta and increase profits.

However, attention was focused on revelations surrounding Moss's private life and a statement by the chairman, Lord Sharman, who said Moss behaved appropriately over the affair. Sharman said he was content that Moss had kept within company rules on conduct over internal relationships. He said: "Andrew has been very open with me and I am clear that there has been no breach of company rules. I am completely satisfied that this has in no way impacted on his role as chief executive and he retains my full confidence."

Employment law specialists said Sharman was obliged to check that all parties had declared their relationships to counter any suggestions of conflict of interest.

It is understood Galvin reported to Moss and did not report directly to her husband, who reported to Andrea Moneta and not Moss.